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Still "Melting", Why and Where?: More Questions than Answers (and a little Ranting!)

By
Real Estate Agent with Alain Pinel REALTORS BRE#00861017

I was reading a Chronicle article recently that-despite being a year old-is still largely relevant. It spoke of neighborhoods facing foreclosure and zip codes with high rates of foreclosure in the Bay Area. 

I am curious about some of the comments made in the article and, of course, want to add my own comments and raise a few questions...

According to Robert Kleinhenz, economist with the California Association of Realtors, the greatest impact was on those places with entry-level home prices. In the Bay Area, this applies to many places:  Oakland, the Bayview in San Francisco, Vallejo, Brentwood and Antioch to name some.

But another interesting comment was made (in this article) by our (San Francisco) Assessor, Phil Ting. He said that the neighborhoods with the most foreclosures were those with large "minority populations...".

Hence my confusion, what is meant by minority population and where is the juxtaposition of "minorities" and entry-level homes?

I live in Nob Hill. The preponderance of my neighbors are Chinese; Chinatown is over the hill. The Richmond and the Sunset have huge Asian populations. None of these neighborhoods are "entry-level".

And the neighborhoods that Mr. Ting mentioned, such as Bayview, Oceanview, Crocker Amazon, Excelsior, et al; is he referring to African Americans? Hispanics? Asians? Whites? (Aren't we in a minority majority state?)

Allow me to digress to an article that I read years ago about the 10 most common surnames of people who were buying homes in San Francisco:  9 out of 10 were Asian surnames-8 Chinese and one, Nguyen, Vietnamese-and number 9 on the list was Martinez.

Are these the people defaulting? For some reason, I don't think so. But then, who is? People who never should have bought a home in the first place? Who had marginal credit, little or no down-payment and "stated" (a polite way of saying lied about) their incomes?

If so, what is the bigger picture here? That we (Realtors, lenders, et al) encouraged people to buy who really shouldn't have? That we should have denied the American dream to people who desperately wanted to own a home but were incapable of hanging on to it?

And some people legitimately qualified for loans. I have clients who used her inheritance-their life savings-and put a full 10% down to over bid a home with multiple offers by $90,000. Their house has gone down in value $100,000 a year in value and we are in a short sale situation. They would like to keep their home but after he lost his job and her income was cutback, they can no longer make the payments; years of scrimping and hard work all for naught.

Ah, but what is the solution? Should we help people keep their homes? Make it harder to bail? My clients couldn't re-do their loan as their income was no longer sufficient to qualify. At the price they will sell their home for-less than half of what they paid-they could afford it. Wouldn't it make more sense to "re-sell" at the short sale price and keep them in their home?

I am glad that the house won't go into foreclosure as then it would most certainly be vandalized and destroyed. If a lender were to re-do loans-even losing a significant amount of money-they would still net more than the cost and diminished value of a foreclosure.

I am not really sure how we got here and I don't have all of the answers but what is happening now is that the rich are getting richer as investors snatch up foreclosed or short sale properties. The middle income folks who have lost their homes no longer have equity and are soured about the home ownership experience. And our government thinks that "rewarding" the corporate greed that got us here in the first place is the solution. It is doubtful that this largesse will "trickle down" to benefit my clients who are losing their home.

I could ramble more but I have to go show some short sales and developer close outs. At least this client is buying property that she and her family will eventually live in.

My last 2 cents, vote for Obama who may be the only way out of this mess. We need to get out of Iraq and then we can clean up our own mess right here at home. How can we justify sheltering Iraqis when we can't shelter our own citizens? The economy is the worst that it has ever been in my lifetime because of the wimp who stole the Presidency from Al Gore--but that is another rant!

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